<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
For the twelve months ended December 31, 1993, the yield on
Dreyfus Liquid Assets was 2.61%. This is the equivalent of an
effective yield of 2.64% after taking into account the effect of
compounding.*
Short-term interest rates have been remarkably stable and remain
at historically low levels. Monetary policy, which is orchestrated
by the Federal Reserve Board, has been unchanged since September
1992 with the discount rate and Federal Funds Rate at 3%. In
general, 1993 was characterized by slow economic growth coupled
with low inflationary pressures. The entire fixed-income market
reacted favorably as evidenced by the long bond breaking the 6%
yield barrier. By the end of the fourth quarter, however, the pace
of economic activity was accelerating and interest rates rebounded
off their lows.
Looking to 1994, the economic momentum of late 1993 appears to
be continuing. Housing and auto sales have shown recent strength
and unemployment is finally coming down. What remains to be seen
is if this upturn is sustainable given the announced tax changes
and health care reform with their potential drag on consumer
confidence and the economy. If, however, the current pace of
economic growth continues or increases, the Federal Reserve and
the fixed-income markets will be watching indicators for renewed
signs of inflation. For the Federal Reserve, maintaining the
current low level of inflation is a priority and any sustained
increase would likely prompt monetary policy action.
We are closely watching these developments so that we can manage
the Fund's portfolio in a manner most rewarding for the investor.
The average maturity of this Fund has been at the long end of the
industry average in an attempt to sustain a higher yield in this
low interest rate environment.
We would like to take this opportunity to thank you for your
participation in the Fund. We look forward to serving your future
investment needs.
Sincerely,
[LOGO OF JOSEPH S. DIMARTINO]
Joseph S. DiMartino President
January 18, 1994 New York, N.Y.
*Effective yield is based upon dividends declared daily and
reinvested daily.
<PAGE>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--4.0% AMOUNT VALUE
- --------------------------------------------- -------------- --------------
<S> <C> <C>
Chemical Bank (London)
2.70%, 5/13/94(a) ............................... $ 50,000,000 $ 50,000,000
NationsBank of North Carolina NA (London)
3.38%-3.60%, 2/8/94-6/27/94 ..................... 145,000,000 145,000,000
--------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $195,000,000).............................. $ 195,000,000
==============
<CAPTION>
<S> <C> <C>
COMMERCIAL PAPER--60.3%
ABN-Amro North America Finance Inc.
3.28%, 1/5/94 ................................... $ 16,000,000 $ 15,994,204
Bankers Trust New York Corp.
3.50%-3.55%, 2/25/94-9/16/94 .................... 240,000,000 236,961,891
Bear Stearns Companies Inc.
3.44%-3.54%, 3/25/94-3/31/94 .................... 70,000,000 69,426,820
CS First Boston Group Inc.
3.40%, 2/4/94-2/7/94 ............................ 50,000,000 49,833,594
Central Hispano North American Capital Corp.
3.25%-3.39%, 1/4/94-3/28/94 ..................... 74,900,000 74,603,902
Corporate Asset Funding Co. Inc.
3.43%, 4/4/94 ................................... 18,075,000 17,918,576
Credito Italiano (Delaware) Inc.
3.34%-3.46%, 1/20/94-4/14/94 .................... 37,000,000 36,775,174
Den Danske Corp. Inc.
3.29%-3.45%, 1/7/94-6/13/94 ..................... 200,000,000 198,576,217
General Electric Capital Corp.
3.25%-3.40%, 1/3/94-4/15/94 ..................... 160,000,000 159,026,041
General Electric Capital Services Inc.
3.23%-3.52%, 1/3/94-4/22/94 ..................... 178,000,000 177,057,691
General Motors Acceptance Corp.
3.34%-3.44%, 1/10/94-2/23/94 .................... 241,000,000 240,265,002
Generale Bank Inc.
3.30%, 1/4/94 ................................... 115,000,000 114,968,567
Goldman Sachs Group L.P.
3.40%-3.54%, 2/25/94-9/23/94 .................... 180,000,000 176,866,390
Hypo U.S. Finance Inc.
3.25%, 2/24/94 .................................. 23,000,000 22,889,255
ITT Corp.
3.30%, 1/3/94 ................................... 200,000,000 199,963,333
Internationale Nederlanden (U.S.) Funding Corp.
3.42%-3.54%, 2/1/94-5/10/94 ..................... 130,000,000 128,799,717
Kreditbank N.A. Finance Corp.
3.39%, 1/10/94 .................................. 75,000,000 74,936,813
Lehman Brothers Holdings Inc.
3.41%-3.43%, 1/5/94-1/13/94 ..................... 100,000,000 99,925,445
Merrill Lynch & Co. Inc.
3.27%-3.43%, 1/7/94-5/23/94 ..................... 115,000,000 114,098,265
</TABLE>
<PAGE>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
- ---------------------------- -------------- --------------
<S> <C> <C>
Morgan Stanley Group Inc.
3.30%-3.40%, 1/3/94-1/18/94 .................... $ 185,000,000 $ 184,754,165
NationsBank Corp.
3.39%-3.63%, 2/28/94-5/20/94 ................... 165,000,000 163,635,573
Santander Finance (Delaware) Inc.
3.30%-3.39%, 1/10/94-1/28/94 ................... 110,000,000 109,810,725
Societe Generale N.A. Inc.
3.49%, 4/18/94 ................................. 15,000,000 14,848,417
SwedBank Inc.
3.33%-3.60%, 2/24/94-3/30/94 ................... 140,000,000 139,046,683
UBS Finance (Delaware) Inc.
3.25%, 1/3/94 .................................. 90,000,000 89,983,750
--------------
TOTAL COMMERCIAL PAPER (cost $2,910,966,210)..... $2,910,966,210
==============
<CAPTION>
<S> <C> <C>
CORPORATE NOTES--8.3%
Bear Stearns Companies Inc.
3.49%, 9/13/94-9/20/94(a) ...................... $ 125,000,000 $ 125,000,000
Ford Motor Credit Co.
3.38%, 2/11/94 ................................. 20,000,000 20,056,461
Merrill Lynch & Co. Inc.
3.02%-3.33%, 4/22/94-9/30/94(a) ................ 125,000,000 124,992,398
Morgan Stanley Group Inc.
3.49%, 9/29/94 ................................. 35,000,000 34,996,752
Northern Trust Co.
3.72%, 1/14/94 ................................. 70,000,000 69,998,778
Pepsico Inc.
3.53%, 1/31/94 ................................. 25,000,000 24,998,073
--------------
TOTAL CORPORATE NOTES (cost $400,042,462)........ $ 400,042,462
==============
<CAPTION>
<S> <C> <C>
SHORT-TERM BANK NOTES--15.7%
Bank of New York
3.52%, 5/24/94 ................................. $ 10,000,000 $ 9,997,354
Comerica Bank
3.30%-3.50%, 2/14/94-9/30/94 ................... 98,000,000 97,929,068
First National Bank of Chicago
3.25%-3.62%, 7/28/94-10/26/94(a) ............... 75,000,000 75,000,000
Huntington National Bank
3.69%, 1/19/94 ................................. 100,000,000 100,000,722
Morgan (J.P.) Delaware
3.72%, 1/14/94 ................................. 107,200,000 107,199,258
NationsBank of North Carolina NA
3.41%-3.66%, 8/2/94-8/18/94 .................... 98,000,000 98,034,148
Old Kent Bank & Trust
3.49%, 9/9/94 .................................. 25,000,000 24,984,165
PNC Bank NA
3.34%-3.60%, 7/8/94-9/12/94 .................... 243,100,000 243,468,609
--------------
TOTAL SHORT-TERM BANK NOTES (cost $756,613,324) . $ 756,613,324
==============
</TABLE>
<PAGE>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
U.S. GOVERNMENT AGENCY--3.9% AMOUNT VALUE
-------------- --------------
<S> <C> <C> <C>
Federal National Mortgage Association
Discount Notes;
3.48%, 9/19/94.................................... $ 175,000,000 $ 170,698,938
3.51%, 9/30/94.................................... 20,000,000 19,483,200
--------------
TOTAL U.S. GOVERNMENT AGENCY (cost $190,182,138)... $ 190,182,138
==============
<CAPTION>
<S> <C> <C> <C>
TIME DEPOSIT--1.1%
Republic National Bank of New York (London)
2.38%, 1/3/94
(cost $52,800,000)................................ $ 52,800,000 $ 52,800,000
==============
<CAPTION>
<S> <C> <C> <C>
REPURCHASE AGREEMENT--6.6%
Kidder Peabody & Co. Inc., 2.66%
dated 12/31/93, due 1/3/94 in the amount of
$320,070,933
(fully collateralized by $195,490,000 U.S.
Treasury
Notes 4.25%-9.50%, due from 5/31/94 to 11/30/94,
and $123,480,000 U.S.
Treasury Bills due 6/2/94, value $324,923,675)
(cost $320,000,000)............................... $ 320,000,000 $ 320,000,000
==============
TOTAL INVESTMENTS (cost $4,825,604,134).... 99.9% $4,825,604,134
======= ==============
CASH AND RECEIVABLES (NET)................. .1% $ 2,529,703
======= ==============
NET ASSETS................................. 100.0% $4,828,133,837
======= ==============
<CAPTION>
NOTE TO STATEMENT OF INVESTMENTS;
</TABLE>
(a) Variable interest rate--subject to periodic change.
See notes to financial statements.
<PAGE>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value--Note 1(a,b)..... $4,825,604,134
Cash................................................. 41,192,804
Interest receivable.................................. 16,826,487
Prepaid expenses and other assets.................... 2,521,933
--------------
4,886,145,358
LIABILITIES:
Due to The Dreyfus Corporation....................... $ 1,986,096
Payable for Common Stock redeemed.................... 53,563,029
Accrued expenses..................................... 2,462,396 58,011,521
----------- --------------
NET ASSETS............................................ $4,828,133,837
==============
REPRESENTED BY:
Paid-in capital...................................... $4,832,015,851
Accumulated net realized (loss) on investments....... (3,882,014)
--------------
NET ASSETS at value applicable to 4,832,891,489 shares
outstanding
(25 billion shares of $.10 par value Common Stock
authorized).......................................... $4,828,133,837
==============
NET ASSET VALUE, offering and redemption price per
share $1.00
($4,828,133,837/4,832,891,489 shares)................ =====
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME:
INTEREST INCOME...................................... $ 174,985,157
EXPENSES:
Management fee--Note 2(a)............................ $24,284,199
Shareholder servicing costs--Note 2(b)............... 13,881,619
Prospectus and shareholders' reports................. 516,183
Custodian fees....................................... 399,292
Professional fees.................................... 102,532
Directors' fees and expenses--Note 2(c).............. 43,102
Registration fees.................................... 39,280
Miscellaneous........................................ 345,067
-----------
TOTAL EXPENSES..................................... 39,611,274
--------------
INVESTMENT INCOME--NET................................ 135,373,883
NET REALIZED GAIN ON INVESTMENTS--Note 1(b)........... 178,144
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $ 135,552,027
==============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS LIQUID ASSETS, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1992 1993
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income--net...................... $ 204,963,180 $ 135,373,883
Net realized gain on investments............ 522,930 178,144
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ 205,486,110 135,552,027
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net...................... (204,963,180) (135,373,883)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold............... 13,227,343,759 15,561,021,427
Dividends reinvested........................ 204,428,380 134,811,058
Cost of shares redeemed..................... (14,130,449,895) (16,369,977,245)
--------------- ---------------
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK
TRANSACTIONS.............................. (698,677,756) (674,144,760)
--------------- ---------------
TOTAL (DECREASE) IN NET ASSETS............ (698,154,826) (673,966,616)
NET ASSETS:
Beginning of year........................... 6,200,255,279 5,502,100,453
--------------- ---------------
End of year................................. $ 5,502,100,453 $ 4,828,133,837
=============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS LIQUID ASSETS, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1989 1990 1991 1992 1993
PER SHARE DATA: ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, $ .9997 $ .9997 $ .9992 $ .9991 $ .9991
beginning of year..... ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net. .0871 .0764 .0570 .0341 .0261
Net realized gain (.0002) -- (.0001) -- (.0001)
(loss) on investments. ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT .0869 .0764 .0569 .0341 .0260
OPERATIONS............ ------- ------- ------- ------- -------
DISTRIBUTIONS;
Dividends from
investment income-- (.0869) (.0769) (.0570) (.0341) (.0261)
net................... ------- ------- ------- ------- -------
Net asset value, end of $ .9997 $ .9992 $ .9991 $ .9991 $ .9990
year.................. ======= ======= ======= ======= =======
<CAPTION>
<S> <C> <C> <C> <C> <C>
TOTAL INVESTMENT RETURN 9.07% 7.99% 5.87% 3.47% 2.64%
<CAPTION>
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net assets.... .66% .65% .67% .72% .77%
Ratio of net investment
income to average net
assets................ 8.72% 7.66% 5.75% 3.43% 2.62%
Net Assets, end of year
(000's Omitted)....... $7,835,754 $7,521,291 $6,200,255 $5,502,100 $4,828,134
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS LIQUID ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. The
Distributor is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager").
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost,
which has been determined by the Fund's Board of Directors to represent
the fair value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss
from securities transactions are recorded on the identified cost basis.
Interest income is recognized on the accrual basis. Cost of investments
represents amortized cost.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to
the seller's agreement to repurchase and the Fund's agreement to resell
such securities at a mutually agreed upon price. Securities purchased
subject to repurchase agreements are deposited with the Fund's custodian
and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. If the value of the underlying securities
falls below the value of the repurchase price plus accrued interest, the
Fund will require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the
seller defaults on its repurchase obligation, the Fund maintains the
right to sell the underlying securities at market value and may claim any
resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
and pay dividends from investment income--net on each business day.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code.
To the extent that net realized capital gain can be offset by capital
loss carryovers, it is the policy of the Fund not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in
the best interests of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from all, or substantially all,
Federal income taxes.
The Fund has an unused capital loss carryover of approximately
$3,882,000 available for Federal income tax purposes to be applied
against future net securities profits, if any, realized subsequent to
December 31, 1993. If not applied, $1,685,000 of the carryover expires in
1995, $2,126,000 expires in 1997 and $71,000 expires in 1998.
At December 31, 1993, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
<PAGE>
DREYFUS LIQUID ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is based on the average daily value of the Fund's net
assets and is computed at the following annual rates: 1/2 of 1% of the
first $1.5 billion; 48/100ths of 1% of the next $500 million; 47/100ths
of 1% of the next $500 million; and 45/100ths of 1% over $2.5 billion.
The fee is payable monthly.
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, interest on
borrowings, brokerage commissions and extraordinary expenses, exceed 1%
of the average value of the Fund's net assets for any full year. No
expense reimbursement was required pursuant to the Agreement for the year
ended December 31, 1993.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund
reimburses the Distributor an amount not to exceed an annual rate of .25
of 1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. During the
year ended December 31, 1993, the Fund was charged an aggregate of
$3,894,273 pursuant to the Shareholder Services Plan.
(C) Certain officers and directors of the Fund are "affiliated
persons," as defined in the Act, of the Manager and/or the Distributor.
Each director who is not an "affiliated person" receives an annual fee of
$6,500 and an attendance fee of $500 per meeting.
(D) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger providing for the merger of the Manager with a subsidiary of
Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain regulatory
approvals and the approvals of the stockholders of the Manager and of
Mellon. The merger is expected to occur in mid-1994, but could occur
significantly later.
Because the merger will constitute an "assignment" of the Fund's
Management Agreement with the Manager under the Investment Company Act of
1940, and thus a termination of such Agreement, the Manager will seek
prior approval from the Fund's Board and shareholders.
<PAGE>
DREYFUS LIQUID ASSETS, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS LIQUID ASSETS, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Liquid Assets, Inc., including the statement of investments, as
of December 31, 1993, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1993 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Liquid Assets, Inc. at December 31, 1993, the results
of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[ERNST & YOUNG LOGO]
New York, New York
January 31, 1994
<PAGE>
[DREYFUS LION LOGO]
DREYFUS LIQUID ASSETS, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 039AR9312
[DREYFUS LION LOGO]
Liquid
Assets, Inc.
Annual Report
December 31, 1993
